California On Track To Pass New Debt Purchasing Laws

In the last couple of weeks, I wrote about how certain debt buyers, like Midland Funding LLC, buy debt from creditors in bulk and then prey on debtors for money even if they cannot prove their case at trial.

It looks like California is going to enact laws beginning January 1, 2014 to help protect consumers from these unsavory practices by bulk debt purchasers.

Titled the Fair Debt Buying Practices Act, California SB 233 passed in the Assembly and Senate on an unanimous vote in favor. The measure now goes to California Governor Jerry Brown for his signature.  Its provisions would take place on January 1, 2014.  I see no reason why Governor Brown will not sign the bill. 

Here are some of the highlights of the bill:

1. Debt buyers must have in their possession proof that they are the sole owner of the debt, the account balance at charge off, date of default or last payment, name and address of both the creditor and debtor, and a complete chain of title on the account if bought and sold multiple times.
2. If the debt is legally too old to file a lawsuit, but still can be reported to the credit bureaus, the debt buyer must use the following language in its first written communication:

“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt buyer] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.”3.  If the debt is older than both the statute of limitations and credit bureau reporting, the    following must be included in the letter:“The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, and we will not report it to any credit reporting agency.”This should be a helpful law.  I estimate 85% of the people receiving a letter with one of these admonitions should be smart enough to tell the creditor to go away.  What do you think?

Ken Jorgensen, California Attorneywww.fresnobankruptcylawgroup.com
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